Nvidia Remains a Free Cash Flow Generating Powerhouse

Image: Nvidia’s first-quarter fiscal 2025 results delivered, and the company remains a Wall Street darling of a stock.

By Brian Nelson, CFA

All eyes were on Nvidia’s (NVDA) first quarter fiscal 2025 results after the close May 22. The company put up record quarterly revenue of $26 billion in the quarter, which beat the consensus forecast, up 262% from the same period a year-ago. The company’s Data Center revenue came in at $22.6 billion, which also came in better than expectations, up 427% from last year’s quarter. The results were good enough to propel Nvidia’s shares higher following the quarterly report.

Founder and CEO Jensen Huang had the following to say about the company’s bright prospects:

The next industrial revolution has begun — companies and countries are partnering with NVIDIA to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center — AI factories — to produce a new commodity: artificial intelligence. AI will bring significant productivity gains to nearly every industry and help companies be more cost- and energy-efficient, while expanding revenue opportunities.

Our data center growth was fueled by strong and accelerating demand for generative AI training and inference on the Hopper platform. Beyond cloud service providers, generative AI has expanded to consumer internet companies, and enterprise, sovereign AI, automotive and healthcare customers, creating multiple multibillion-dollar vertical markets.

We are poised for our next wave of growth. The Blackwell platform is in full production and forms the foundation for trillion-parameter-scale generative AI. Spectrum-X opens a brand-new market for us to bring large-scale AI to Ethernet-only data centers. And NVIDIA NIM is our new software offering that delivers enterprise-grade, optimized generative AI to run on CUDA everywhere — from the cloud to on-prem data centers and RTX AI PCs — through our expansive network of ecosystem partners.

Not only is Nvidia’s top line growing at a breakneck pace, but the firm’s non-GAAP gross margin is quite attractive, too, coming in at 78.9% in the quarter, up from 66.8% in the same period a year ago. The company’s pace of earnings expansion was a sight to see in the quarter, with the firm putting up non-GAAP diluted earnings per share of $6.12, which was up 461% on a year-over-year basis. Looking ahead to the second quarter of fiscal 2025, management is targeting revenue to be $28 billion, plus or minus 2%, which was enough to please the Street, and non-GAAP gross margin in the range of 74.8%-75.5%, plus or minus 50 basis points. 

Nvidia ended its first quarter with $31.4 billion in cash and cash equivalents versus short- and long-term debt of $9.7 billion, good for a very nice net cash position. Cash flow from operations surged in the first quarter to $15.3 billion from $2.9 billion in the year-ago period. Free cash flow in the first quarter was $14.98 billion, up significantly on a year-over-year basis. Nvidia continues to be the poster child for the AI revolution, and its first-quarter fiscal 2025 results delivered on the high expectations embedded in the company’s stock. The firm announced a 10-for-1 stock split, while it raised its quarterly cash dividend 150%.

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